Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor

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A technician for Essilor making lenses at a factory in France. The merger would combine Essilor with Luxottica, whose brands include Ray-Ban and Oakley.CreditCreditJean-Christophe Verhaegen/Agence France-Presse — Getty Images

LONDON — Essilor of France said on Monday that it would merge with the Luxottica Group of Italy, owner of the Ray-Ban and Oakley brands, in a $49 billion deal that would create a giant in the eyewear industry.

The combined company, to be known as EssilorLuxottica, would be the largest player in the eyewear market, manufacturing lenses for prescription glasses and sunglasses, as well as frames. It would have a presence online as well as in stores, with brands including Foster Grant, Oliver Peoples, Persol, LensCrafters, Pearle Vision and Sunglass Hut.

The deal follows more than four years of talks. The new company would have more than 140,000 employees and sales in more than 150 countries. Based on 2015 results, it is forecast to have revenue of more than 15 billion euros, or about $16 billion, in 2016.

“The new group would be a clear leader in the optical industry, with a strong brand portfolio, global distribution capabilities and complementary expertise in ophthalmic lenses, prescription frames and sunglasses,” Fred Speirs, a UBS analyst, said in a research report on Monday.

Luxottica, which makes prescription eyeglasses and sunglasses under a variety of brands, and Essilor, a maker of lenses, are the two largest companies in the sector, with Luxottica having a 14 percent market share and Essilor a 13 percent share, according to the market research firm Euromonitor International. Johnson & Johnson is the next largest, with a 3.9 percent share.

The two companies were worth a combined €46.3 billion, based on their market capitalization at the end of trading on Friday, making the deal one of Europe’s largest cross-border transactions. They said they expected to save €400 million to €600 million “in the medium term.”

More than half of revenue at the combined company would come from the United States, while Europe would account for about 22 percent and 18 percent would come from Africa, Asia and the Middle East.

“By joining forces today, these two international players can now accelerate their global expansion,” Hubert Sagnières, the Essilor chairman and chief executive, said in a news release.

The transaction is expected to close in the second half of the year, but requires regulatory and shareholder approval.

It comes at a time of significant growth and change in the global eyewear market, which had a value of about $121 billion last year, according to data from Euromonitor.

Aging populations, greater access to health care, awareness of sun-related damage and a rising middle class in emerging markets have led to a surge in sales in eyewear, particularly for branded frames.

Luxottica makes frames for luxury brands like Armani, Chanel and Prada, and it is the biggest retailer of eyewear in the world. Its largest rivals include Kering, which owns Gucci and Alexander McQueen, and Safilo, which holds the licenses for Dior, Fendi and Céline, brands owned by LVMH Moët Hennessy Louis Vuitton, the largest luxury conglomerate.

Under the terms of the deal, Delfin, the family holding company of the Luxottica founder and executive chairman, Leonardo Del Vecchio, would exchange its 62 percent stake in Luxottica for shares in Essilor, becoming the combined company’s largest shareholder.

The company’s 16-member board would consist of eight directors nominated by Essilor and eight nominated by Delfin.

The merger resolves lingering concerns over a leadership succession plan at Luxottica. Mr. Del Vecchio, who is 81, founded the company in 1961 and has been chairman ever since. But the role of chief executive has been a revolving door.

In 2014, Mr. Del Vecchio pledged to double the group’s revenue over the next decade, and to look into mergers or acquisitions to secure Luxottica’s future.

Luca Solca, a luxury-sector analyst for Exane BNP Paribas, said the deal “would be excellent news for both stocks.”

He added: “It creates significant synergies, both in revenues and costs; it defuses the risk of heightened competition between the two and it removes uncertainty on succession at Luxottica.”

Citigroup and Rothschild and the law firm Cleary Gottlieb Steen & Hamilton advised Essilor, while Mediobanca and the law firms Bonelli Erede Pappalardo and Bredin Prat advised Delfin.